Show them the money
Like most Americans, many years ago, in advance of turning 50, I began receiving offers to join the Association for the Advancement of Retired People (AARP). I was insulted.
Retirement’s not even a blip on my radar. Many Arkansans in the 50-plus range are in the same boat. However, no matter how far off it may be, when it happens, we should all agree more retirement money means a better retirement.
And hopefully, if you’ve reached an age where this conversation matters, you’re self-aware enough to know your own limitations and aptitudes. This is why some of us entrust our financial futures to financial services providers (FSP) of some kind. After all, anyone who represents himself in court has a fool for a client, right?
So why should the pensions of state employees be treated differently?
Last year the Ledge passed Act 411 of 2023, which directed the Treasurer to “. . . divest certain investments or obligations due to the use of environmental, social justice, or governance-related metrics . . . . ”
The act essentially tells the Treasurer to come up with a blacklist of FSPs and that an oversight committee be appointed to hold everyone’s feet to the fire on divestment from the blacklist.
The operative words are “environmental,” “social justice” and “governance,” shortened to ESG, which is easier to say, and more repeatable. We’ll call it a buzz-cronym.
ESG, like DEI (diversity, equity and inclusion), has become a flash point for the starboard side of the political spectrum. However, normal people closer to the keel are also open to it (within reason). The combination of right and center creates a legislative dynamic duo that, when combined with the infusion of the word “discrimination” into the debate (no one’s for discrimination), creates “Three Amigos” and—bing, bang, boom—legislation passed, signed, enacted.
So, in a nutshell, the state is now prohibited from investing with FSPs that specifically “discriminate” against firearms/ammunition, and/ or oil and gas companies.
But remember, “Three Amigos” (the 1986 movie) killed the invisible swordsman in the process of verifying that the bush that was singing was indeed the “singing bush.” Nothing goes exactly as planned.
Here’s the deal:
The best years of my previous career were spent defending oil and gas companies from a public seeking to unfairly damage an industry that mostly did right. Additionally, I drive a gasoline-powered pickup.
In related news, I also like to assist in the protection of Arkansas’ flooded timber and crop land, which is pillaged every year through the blatant misappropriation of waterfowl food stolen by ducks and geese.
Because of this, I own several different types of shotguns in varying gauges. I’m okay with guns and gasoline because using them, in most cases, is legal. Because of this, they should not suffer discrimination.
As long as an investment kicks back more than was kicked in, and it doesn’t benefit terrorism, slavery or the Texas Longhorns, I’m all in.
However, I’ve been around the block more than once, and know oil companies and gun manufacturers aren’t always automatic winners. No industry is immune to the havoc that can be wreaked by the invisible hand of the market.
Even Walmart and Tyson have bad months. And look at blue-chip Boeing. Its stock traded around $260 in December but now trades in the low $190s. Stuff happens.
So last week’s statement by ESG Oversight Committee member Steve Cook caught my attention. He’d like to give retirement systems the opportunity “to say why or why not” companies “should or should not remain in their portfolio.”
Am I missing something here, or does it make perfect sense to let those who are accountable for a fund’s performance make their case based on the numbers without political motive?
Unfortunately, even if the Ledge agreed, it wouldn’t matter. No option for this kind of discussion exists because no legal authority was provided to the committee to consider the financial impact of firing certain FSPs. Come again?
Correct. This finance-related committee has no authority to consider the financial impact of firing financial service providers. To me, that sounds like, I don’t know … favoritism? And last I checked—just a few minutes ago—thesaurus. http://thesaurus.com
com http://thesaurus.com says “discrimination” and “favoritism” are synonymous.
But let’s just call it what it really is: a national proxy-war between conservatives and the liberal “woke” movement, two ends of the political spectrum for which I have little use or tolerance.
Think that’s hyperbole? Just look across the river at Tennessee and Mississippi. Both are suing Black Rock Inc. (largest investment firm on the planet; manages $3 trillion) over its climate policies. In Arkansas, blacklisted FSPs include other giants like UBS, Goldman Sachs and Credit Suisse as well, and for what reason?
It’s not because they’re pouring state retirement money down the drain. It’s not because they got in a spat with a government bureaucrat.
It’s because it seems like some up at the Ledge are more interested in short-term, personal and political gain than … well … anything else. Perhaps the Ledge should be reminded that the Black Rocks of the world didn’t get where they are by losing money for investors.